Rupee forecast raised on flows, current account: HSBC

HSBC noted the rupee will benefit from any inclusion of local government bonds in the JP Morgan government bond index for emerging markets, and also cites the $1 billion rupee-linked bond issuance launched by World Bank's private sector arm International Finance Corp.

Reuters | Last Updated: October 11, 2013 12:23 (IST)

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HSBC cut its dollar/ rupee forecast for the end of the year to 62 from 65 previously, citing improvements in the current account deficit and measures to attract inflows.

HSBC noted the rupee will benefit from any inclusion of local government bonds in the JP Morgan government bond index for emerging markets, and also cites the $1 billion rupee-linked bond issuance launched by World Bank's private sector arm International Finance Corp.

The investment bank also lowers its end-2014 forecast for the pair to 66 from 70 earlier.

Sharp gains, however, would be capped as HSBC suspects the RBI could utilise the rupee's strength as an opportunity to build up its forex reserves.